Reverse Mortgage in
Alameda County, California
Reverse Mortgages Explained
Do you need another stream of guaranteed income for your retirement? Do you have equity built up in your home? If you do, you could qualify for a reverse mortgage.
The Federal Housing Administration created reverse mortgages for people 62 and older who have substantial equity. A lender loans an amount based on a percentage of the value of your house, often setting up a monthly payment, an equity line, a lump sum, or a combination of equity line and lump sum. If you decide to sell, or if you pass away, the loan will be paid back with the cash from the sale. If the sale price isn’t enough to pay off the loan, it’s still considered settled. You are on title as the owner of the property. A reverse mortgage loan is just another refinance.
If reverse mortgages seem too good to be true, keep in mind they were devised and insured by the government to assist seniors with equity and are only available to those who qualify.
Why Get a Reverse Mortgage in Alameda County?
An exciting way to use this money is to take a lump sum payment to pay for a new house. Or you could pay off your current mortgage and enjoy freedom from mortgage payments. You will continue to remain responsible, however, for property taxes, hazard insurance, and similar fees, like HOA or other association fees.
Another option is for the lender to create a line of credit you can use by writing checks, or pulling cash, giving you spending flexibility as you start retirement.
Fees and Costs of a Reverse Mortgage in Alameda County
The lender charges fees to open and close the loan and to ensure or guarantee the income. But you can roll the fees into the loan itself so that they’re paid off when the loan is paid off. You only pay for the standard cost of getting your home appraised. It’s also required that you receive flow-cost ($125.00) information from a reverse mortgage counselor.
As with a conventional mortgage, you still own your home, therefore when the home gets sold, you or your heirs keep any remaining equity. But while selling the home is a common way to satisfy the debt, a sale is not required. If you have other means of satisfying the debt you’re welcome to use them.
Because home values in Alameda County are fairly high, you should find out the value of your home and try to get the best loan possible. The government (FHA) lending limit is $679,650. You could also receive a larger amount than that through a private jumbo reverse mortgage that is not government-backed.
Average Reverse Mortgage Rates in Alameda County
Interest is charged on a reverse mortgage during the lifetime of the loan. Your rate will be determined by whether you choose a HECM fixed rate, monthly adjustable or adjustable rate mortgage. Or if a Jumbo is the best product for your goals, currently the Jumbo’s offer fixed rates only. The higher the rate the more the lender will loan, generally speaking.
Reverse Mortgage Alert maintains a table showing average monthly rates from Jan. 1, 2015 to two months before the current month. This tool is useful for getting an idea of trends, but keep in mind that these are averages for the whole State of California, and your rate may differ. You may also be able to get a slightly lower rate for annually adjustable, monthly adjustable rate or fixed rate mortgages.
What are the Different Types of Reverse Mortgages Available in Alameda County?
You can use a fixed interest rate reverse mortgage to get a lump sum payment of a percentage of your home’s appraised value. Or you can use a variable interest rate loan to set up ongoing payments for the rest of your life, for a different term, or to create a line of credit.
Another type of loan is a HECM for Purchase reverse mortgage, which is exactly like the classic HECM mortgage except that this loan is used to upgrade or downsize to a new home. This can be a good way to buy a new home without tying up all your cash in the new home, thus preserving your assets for other uses.
The upper lending limit for a HECM is $679,650. The amount available is a percentage of the lending limit, based on the age of the youngest borrower. If your home is worth more than that, a jumbo reverse mortgage may be available. Because it is not government-backed, a jumbo reverse mortgage is not subject to the upper lending limit. It is for condos with a value of $500,000 or higher and single-family residences with a value of $1,200,000 or more. A Jumbo can be used on Single Family residences, Townhomes, Condos, Multifamily homes 1-4 units and PUD’s. A Jumbo loan can be used on all of these homes from $500,000 in value or more, but in most cases, we would recommend a HECM as a first choice. When values are at or higher than $1.2M then the borrower(s) may receive more money than with a traditional HECM.
While you can qualify for a HECM at age 62, jumbo reverse mortgages work better for older borrowers, often in their 70s, and houses with higher values, so talk to a loan officer at Trinity Mutual to learn if this is a good choice for you.
Are you interested in taking out a reverse mortgage in Alameda County, CA? Apply now.